The Ohio State University

1959

Supplemental Unemployment Benefits

Teple, Edwin R. Ohio State Law Journal, vol. 20, no. 4 (1959), 583-594.http://hdl.handle.net/1811/68186

Downloaded from the Knowledge Bank, The Ohio State University's institutional repository

Knowledge Bank kb.osu.edu

Ohio State Law Journal (Moritz College of Law) Ohio State Law Journal: Volume 20, Issue 4 (1959)

SUPPLEMENTAL UNEMPLOYMENT BENEFITS

EDWIN R. TEPLE*

The Ohio Legislature, in its most recent session, passed not one, buttwo bills relating to supplemental unemployment benefits.

The basic act 1 amends Section 4141.35 to the Revised Code,which includes a provision for the cancellation of waiting period and therepayment of benefits under certain circumstances, so as to provide thatno order cancelling a waiting period or requiring the repayment or with-holding of benefits shall hereafter be made, nor shall such cancellation,repayment or withholding hereafter be required, 'by the administratorsolely because private unemployment benefits have been or will be paidwith respect to weeks prior to the effective date of the amendment, underarrangements or plans described in Section 4141.36. The same act amendsSection 4141.36 to read as follows:

Sec. 4141.36. No agreement by an employee to pay any por-tion of the contribution or other payment required to be madeby his employer under sections 4141.01 to 4141.46, inclusive,of the 'Revised Code, is valid. No employer shall make a de-duction for such purposes from the remuneration or salary ofany individual in his employ. Such sections do not affect thevalidity of private voluntary arrangements or plans by whichemployees individually or *** collectively agree to make ***payments for the purpose of securing private unemploymentbenefits in addition to *** the benefits provided by sections4141.01 to 4141.46, inclusive, of the Revised Code ***, or thevalidity of private arrangements or plans under which em-ployers make payments for such purpose. Private unemploy-ment benefits paid under such arrangements or plans shall notbe construed to be compensation for personal services underSections 4141.01 to 4141.46, inclusive, of the Revised Codeand benefits otherwise payable under such sections shall notbe denied or reduced because of the receipt of private unemploy-ment benefits under such arrangements or plans. The provisionsin sections 4141.35 and 4141.36 of the Revised Code pertain-ing to private arrangements or plans under which employersor employees contribute for the purpose of providing privateunemployment benefits in addition to the benefits provided bysections 4141.01 to 4141.46, inclusive, of the Revised Code,shall apply to all applications and proceedings, including thosenow pending or hereafter instituted.

* Member of the Ohio Bar, editor-in-chief, Ohio State Law Journal, 1935-36.1 Amended Senate Bill No. 53, passed and approved on March 19, 1959,

filed with the Secretary of State on March 20, and effective June 19, 1959.

OHIO STTE LAW JOURNAL

The second enactment 2 was passed as a temporary, emergency meas-ure to permit the payment of supplemental unemployment benefits forweeks already accumulated, without having to wait for the June 19th ef-fective date of the basic amendment. This act authorized and directedthe Administrator of the Bureau of Unemployment Compensation:

(a) To recognize the validity of voluntary arrangements orplans by which employees and employers, individually or collec-tively, agree or have agreed that certain sums of money be paidinto a trust fund for the purpose of securing private unemploy-ment benefits in addition to the benefits provided in sections4141.01 to 4141.46, inclusive, of the Revised Code;(b) Notwithstanding the provisions of sections 4141.35 of theRevised Code requiring cancellation of waiting periods and re-payment of withholding of benefits, to pay unemploymentbenefits in accordance with the provisions of sections 4141.01to 4141.46, inclusive, of the Revised Code, without deduc-tion of the amount of the additional private unemploymentbenefits described in section (1) (a) of this act whether thepayment of such private unemployment benefits is made weeklyor at other intervals and regardless of how such payment iscomputed or of the period with respect to which such paymentis made and not to order cancellation of waiting periods or re-payment of unemployment benefits heretofore allowed or paidbecause an applicant hereafter receives such additional privateunemployment benefits.

Thus, for the first time in Ohio, supplemental unemployment bene-fits became available to unemployed workmen without resulting in thecomplete cancellation of, or a deduction from, the benefits due under theOhio Unemployment Compensation Act. A large number of workers,undoubtedly in the thousands, in such industries as steel, rubber and automanufacturing, were directly affected, and a review of the legal problemwhich gave rise to these enactments should be of interest. This newphenomenon, combining private contractual payments with state benefits,is national in scope and may have even greater significance in the future.It is similar in effect to some of the private pension plans dovetailed withfederal retirement benefits under the Social Security Act.

Until the enactment of these amendments, Ohio was one of a veryfew states which had failed to permit the concurrent payment of stateunemployment insurance and private unemployment benefits of the type

2Amended Substitute House Hill 820, passed May 5, 1959, approved May7, 1959, and filed in the office of the Secretary of State on the same date. Byvirtue of its emergency clause, this bill became effective on May 7, 1959. Becauseof its temporary nature, to be in force and effect only until June 18, 1959, pursuantto the express terms of Section 2, the act was not assigned a Code sectionalnumber.

[Vol. 20

1959] SUPPLEMENTAL BENEFITS

adopted by most of the Ohio employers having supplemental paymentplans.

3

The subject of supplemental unemployment benefits is not new onthe Ohio scene, and an understanding of the history and significance ofthe present plans is necessary to an appreciation of the interest in them.4

Actually, supplemental unemployment plans grew out of, and aresimilar to, the guaranteed annual wage plans which have been adopted bysome industries. A guaranteed annual wage plan is one under which theemployer agrees to furnish either employment or wages during a specifiednumber of weeks during the year for all, or a defined group, of hisworkers.5 Most guaranteed annual wage plans are administered entirelyby the employer and are financed on a pay-as-you-go basis. The sup-plemental unemployment benefit plan, on the other hand, is not a guar-antee of employment or earnings; it is rather a supplement to paymentsdue under the state unemployment insurance laws during periods of un-employment. In most instances, supplemental unemployment benefit agree-ments involve employer financed trust funds administered by an inde-pendent board, from which the benefits are paid.

One of the first guaranteed annual wage plans in this country wasput into operation in 1894 under the joint sponsorship of the NationalWallpaper Company and the Machine Printers and Color Mixers Union,

3 Forty-three states have now taken action of one kind or another permittingsupplementation of state unemployment benefit payments by private paymentsunder supplemental unemployment benefit plans of the so-called Ford type. Priorto 1959, only four states had prohibited such supplementation,-Indiana, NorthCarolina, Ohio and Virginia. Indiana, like Ohio, enacted legislation early in1959 specifically permitting such supplementation. In Indiana's case, the 1959amendment replaced a prior amendment specifically prohibiting supplementation.Bureau of Employment Security (Department of Labor) [Hereinafter referred toas BES] Bulletin No. U-172, Supplemental Unemployment Benefit Plans andUnemployment Insurance, 11 (1957).

Much of the historical and factual material in this article has been obtainedfrom this source. The bulletin outlines many of the interesting details of theseplans, including useful tables and charts. An addendum is attached to Unem-ployment Insurance Program Letter No. 541, dated October 13, 1959, whichbrings the factual material down to date. The bulletin was prepared primarilyfor the benefit of state employment security agencies, but additional copies maystill be available at the Bureau's central office in Washington, D. C. The originalbulletin also contains an appendix listing the large number of selected readingson guaranteed employment and supplemental unemployment benefit plans. See,also, 1 C. C. H. UNEAIP. INS. REP., FED. § 2300 (1959).

4 Bills on this subject were introduced in the Ohio legislature in 1955 and1957, but failed to pass. A provision specifically permitting supplementation ofstate unemployment benefits was also included, along with other amendmentsto the Unemployment Compensation Act, in the referendum proposal which wassubmitted and defeated at the polls in November, 1955.

r For employees working at an hourly rate, the guaranteed "wage" isfigured on the basis of the hourly rate at straight time.

OHIO STATE LAW JOURNAL

and similar plans were adopted by Proctor and Gamble in 1923, Hormelin 1931, and Nunn-Busch in 1935.'

Unemployment insurance legislation, both state and federal, and thefederal Fair Labor Standards Act, have recognized the existence of guar-anteed annual wage arrangements and have made specific provision forspecial treatment wherever these plans exist. The original Wisconsin Un-employment Insurance Law contained a provision which released em-ployers who guaranteed at least thirty-six hours of work per week for aperiod of not less than forty-two weeks out of the year, from the re-quirement of setting up reserve accounts in the state unemployment fund.The unemployment insurance titles of the Social Security Act and theInternal Revenue Code provide for the approval of state unemploymentinsurance laws which grant lower rates to employers who have agreed tomaintain guaranteed employment accounts under which all employees willreceive not less than thirty hours of pay for forty weeks in the year, withone hour a week deducted for each added week guaranteed. Many statesdisregard this provision, but some, including Wisconsin, California, Florida,Idaho, Indiana, Minnesota and Oregon, did take advantage of the federalalternative and included similar provisions in their state unemployment in-surance laws. The federal Fair Labor Standards Act exempts employersfrom its overtime pay provisions if they are operating under a union agree-ment guaranteeing employment on an annual or semi-annual basis, pro-vided certain minimum standards are met.

Despite the concessions made for these plans in this legislation, sub-stantial additional interest has not been apparent. The Latimer reportjindicates that in 1947 there were approximately 196 guaranteed annualwage plans in existence. The plans concerning which information couldbe obtained, 188 in number, covered roughly 61,000 workers. It is re-ported that a few new plans of this type have been initiated since 1947,and some of those previously in existence have been discontinued, but it isestimated that not more than 80,000 workers are covered by plans of thistype at the present time.' As a result, neither the state employment securityagencies nor the Wage and Hour Division of the Department of Laborhave had very much experience with guaranteed employment plans.

Insofar as state unemployment benefits are concerned, in the fewinstances in which the question of concurrent guaranteed annual wagepayments and state unemployment benefits has arisen, it has been heldthat the latter were not payable; usually on the basis that the claimantwas not unemployed in the defined sense during weeks with respect to

6 BES Bulletin No. U-172, 1.7 Murray W. Latimer, Research Director, Office of War Mobilization and

Reconversion, GUARANTEED WAGES-REPORT TO THE PRESIDENT BY THE ADVISORY

BOARD (1947).8 B!S Bulletin No. U-172, 2. For an explanation of this, see Eberling, GAW;v

and Unemployment Compensation, 8 VAND. L. REv., 458, 460-61 (1955).

[Vol. 20

SUPPLEMENTAL BENEFITS

which payments under a guaranteed annual wage plan were made. 9

The idea of supplemental unemployment benefits arose as a com-promise with demands for the guaranteed annual wage. As early as 1943,the United Steel Workers of America began to negotiate for a guaranteedannual wage plan as a part of the provisions sought in their new collectivebargaining agreement with the steel companies. This demand, along withthe others, was submitted in 1944 to the National War Labor Board.A panel was appointed to study the proposals and to hear arguments proand con, and after receiving the panel's report, the Board declined togrant the request for a guaranteed annual wage plan. In December ofthat year, however, the Board did recommend the appointment of a specialcommission to make a study of guaranteed annual wages, which resultedin the Latimer Report, previously referred to. The Union's efforts towin a guaranteed annual wage plan continued after World War II, atwhich point other large unions joined the campaign, particularly the AutoWorkers and the Electrical Workers.

In 1954, the subject of a guaranteed annual wage became a primaryissue between the UAW and the large auto manufacturers. In April ofthat year, the UAW prepared and released a description of the guaranteedemployment plan which would be sought at the bargaining table when thesubject of a new contract came up.'0 Negotiations between the UAWand the Ford Motor Company began in earnest in May, 1955, and fromthese negotiations arose the first supplemental unemployment benefit agree-ment, often referred to as the Ford SUB Plan.

The Ford plan for supplemental payments is administered by an in-9 BES Bulletin No. U-172, 2. Accord. Tweten V. U.C.C., (Ore. Cir Ct.,

1955), cited in 1 CCH UNEMP. INs. REP., FED. § 2300, p. 2421 (1959).10The UAW's proposal was that all workers would be guaranteed forty

hours a week. The employer's liability for guaranteed payments to any workerfor any week was to be reduced, however, by an amount equal to the basic stateunemployment compensation benefit which the worker became entitled to receivefor that week. Unless otherwise directed by the employer, a worker laid off fora full week was to be required to register with the state employment serviceand accept suitable employment. The standards of suitability were to be specifiedby the agreement, without regard to the standards contained in the state unem-ployment compensation laws, if any, in order to protect workers against pressureto accept jobs paying sub-standard wages or having sub-standard working con-ditions (a function which the state standards were originally designed to fulfill).The plan was to be administered, according to the proposal, by a board of admin-istrators who would be empowered to interpret the terms of the guarantee pro-visions and to decide all questions involving eligibility for payments thereunder,including the amount and duration of payments due any worker, whether thework offered was suitable, etc. Preparing a Guaranteed Employment Plan ThatFits UA'W Members Like a Glove-UAW, Detroit, Michigan (1954).

In this connection, it is interesting to note that the Latimer Report, supranote 7, suggested the integration of wage guarantees with the unemploymentinsurance program. Many other GAW proposals in the early '50s actually fol-lowed this pattern, which was a distinct departure from the earlier plans of thistype. Eberling, supra note 8, at 464-65.

1959]

OHIO STATE LAW JOURNAL [Vol. 20

dependent board of trustees composed of company and union representa-tives, and an impartial chairman. The company contributes to a trustfund five cents per hour for each hourly paid worker. The contributionsmay be discontinued whenever the fund reaches fifty million dollars. Thebenefit payments are made from this trust fund. Workers are eligibleonly if they are laid off, having no vested interest in the fund. If a workernever becomes unemployed, leaves his work voluntarily, or is dischargedfor misconduct, he is not eligible for the benefits provided. The maximumduration of benefits under this plan is twenty-six weeks in any one year,and the maximum weekly benefit is $25.00. By its terms, the Ford plan isdirectly integrated with state unemployment insurance laws, as well ascontingent in the first instance upon rulings favorable to the plan by In-ternal Revenue and the Wage and Hour Division.'"

The great majority of other existing supplemental unemploymentbenefit plans follow the basic pattern set by the Ford plan. Plans of thistype have been established by General Motors, Chrysler and AmericanMotors, as well as by the major producers in the steel industry, 2 rubber,13 and American and Continental Can Companies. Although the detailsof these plans vary somewhat,' 4 they have the same tie-in with the stateunemployment insurance laws.

11 See, pamphlet published by the Ford Motor Company, Dearborn, Michigan,The Ford Supplemental Unemployment Benefit Plan (1955).

As explained in this pamphlet: "Integration with state unemployment com-pensation systems is an essential condition to the effectiveness of the Ford Supple-mental Unemployment Benefit Plan. Before the benefit payments can start, rulingsmust be obtained in states in which the company has 2/3 of its hourly workingforce that simultaneous payment of a Plan benefit shall not reduce or eliminatethe state unemployment benefit for the same week." In an effort to provide ananswer for any unfavorable rulings which might be obtained, an alternate pay-ment plan was provided under which a laid off worker would draw unemploy-ment insurance for two or three weeks, then collect a cumulative lump-sumpayment for those weeks under the private plan, it being expected that the onlyloss in state payments would be for the weeks in which the private lump-sumpayment was received. As it happened, however, favorable rulings were obtainedfrom the required number of states prior to the June 1, 1956, date on which thesupplemental payments were to commence. In addition, it was explained thatthe plan would not go into effect until the company had received favorablerulings recognizing, (1) that the company's contributions to the trust fund wouldbe deductible expenses for income tax purposes, and (2) that such contributionswould be excluded in computations under the Fair Labor Standards Act. Theserulings were also obtained from the two agencies involved.

12 United States Steel, Bethlehem, Republic, and 9 other steel companies.13 Goodyear, Firestone, Goodrich, and U.S. Rubber.14The American Can and steel company plans, for instance, provide for

maximum duration of fifty-two weeks, twice as long as the Ford plan. Themaximum weekly benefit is the same under these two plans for the first twenty-six weeks, but thereafter is increased to $46.80 in the case of American Can, and$47.50 for U.S. Steel; both plans providing for additional allowances of $2.00per dependent up to a maximum of four dependents. The rubber company plans

SUPPLEMENTAL BENEFITS

The plans adopted by Pittsburgh Glass and Libby-Owens-Ford,sometimes referred to as the Income Security plans, are basically differentin that an independent account is established within the trust fund for eachworker. The worker in effect acquires a vested interest in his own ac-count since he may collect the weekly benefit whether he is out of workbecause of a lay-off by the company or illness. If he quits or dies, the bal-ance of his account is payable to him or his survivors. Under these plans,there is no integration with the state unemployment insurance laws. Likethe Ford plan, however, these plans are administered by an independentboard of trustees, and are fundamentally designed to supplement state un-employment payments.15

The interest of the Unions in supplemental benefits during periodsof unemployment undoubtedly arose as a direct result of their inability toobtain more liberal provisions in the state unemployment insurance lawsthrough legislative amendment. 6 One of the clearest demonstrations ofthis is the provision for a total combined weekly benefit, which includespayments under the applicable state law. Under the auto, steel, and rub-ber company plans, the maximum total combined benefit is not to exceedsixty-five per cent of the worker's after-tax, straight-time weekly wage.This, of course, is substantially above the maximum provided under moststate laws at the present time, but approximately equal to the maximumrecommended more than ten years ago.

Legal rulings on SUB show an interesting pattern. Of the statesruling on the income security type of plan, it was uniformly held, shortlyafter the adoption of the plan by the glass companies, that payments con-current with weekly benefits under the state unemployment insurance laws

are administered by the company in each case, instead of an independentboard of trustees. BES Bulletin No. U-172, table 1.

15 Seven Hawaiian pineapple companies have adopted a pl.an which coversworkers affected by a permanent reduction in force by providing private weeklybenefit payments in the event that unemployment compensation is not payableunder the Hawaiian Employment Security Law (for reasons of non-coverage).This plan is more like a severance pay provision, there being no provision fora trust fund to finance the payments. The east coast shipping operators alsohave a plan which provides that a seaman is to receive $15.00 per week forweeks with respect to which he also receives state unemployment insurancepayments; but if he is not entitled to such state benefits, he will receive $30.00per week under the plan. Maximum yearly benefits are limited to $180.00 perseaman. BES Bulletin No. U-172, 8.

1G See, Eberling, supra note 8, at 466. Time and again, bills were intro-duced, with strong labor backing, to liberalize the state laws both with respectto maximum duration and maximum benefit amounts, as well as less stringentdisqualification provisions. These efforts met with determined opposition fromvarious sources, and more often than not experienced little or no success. Eventoday, the great majority of state laws have failed to come up to the minimumrecommendations of the agency entrusted with the administration of the federalaspects of the unemployment insurance program.

1959]

OHIO STATE LAW JOURNAL

were permitted.' 7 The reasoning in support of this position seemed to bethat the contributions by the employer amounted to wages when paid intothe worker's account, and therefore were not wages when paid out of theaccount as benefits to the recipient during a subsequent week of unem-ployment."5

Of the forty-five states which had ruled on the Ford type plan byFebruary, 1958, forty-one decided that supplementation was permissiblewithout cancellation of, or deduction from, the benefits provided under thestate unemployment insurance acts." Of the four states which adopted acontrary view, North Carolina and Ohio did so by agency rulings, andIndiana and Virginia took specific legislative action.20

The Administrator of the Ohio Bureau of Unemployment Compen-sation, in support of his ruling, reasoned that the payments under the Fordplan were "compensation for personal service" and amounted to wageswithin the meaning of the applicable definitions of the Ohio Act. It wastherefore held that a claimant's benefits under Ohio law would have to bereduced by the amount of any supplemental benefit payments. The rulingrelied heavily upon the decision of the United States Supreme Court in theNierotko case, 2 ' and upon the circumstance that in June, 1955, the OhioSenate, by a vote of twenty-one to twelve, had defeated a bill whichwould have amended the Ohio Unemployment Compensation Act so asto specifically authorize supplementation, and in November of the sameyear a referendum, which included an express amendment permitting sup-plementation along with other amendments to the Act, was defeated bythe electorate. In contrast, the rulings in most of the other states heldthat the supplemental unemployment benefit under the Ford plan wasneither wages, remuneration, nor earnings, and that no work or service

17Rulings to this effect were obtained from the Attorney General in Cali-fornia, Michigan, Oklahoma, and West Virginia; favorable agency rulings wereissued in Arkansas and Ohio; and Legislative approval was obtained inIndiana in 1957. BES Bulletin No. U-172, table 4.

ISBES Bulletin No. U-172, 19. This position appears inconsistent with theruling of the Internal Revenue Service that benefits paid to recipients under theincome security type of plan amount to wages for FICA and income tax with-holding purposes. Id., table 2.

'0 In twenty-eight of the states, this interpretive ruling was made by thestate Attorney General; in nine states, by a ruling of the state employmentsecurity agency; and in the case of three states and Hawaii, by legislative amend-ment. BES Bulletin No. U-172, table 3, and addendum.

20 BES Bulletin No. U-172, 11.

21 Social Security Board v. Nierotko, 327 U.S. 358 (1946), in which it was

held that the back pay awarded under an NLRB decision amounted to remunerationfor services within the meaning of the Old Age and Survivors Insurance pro-visions of the Social Security Act. The Supreme Court's decision, of course,supported the worker's claim that such "pay" should be credited to his wagerecord, and was based in part upon the effect of the Board's ruling that theworker's employment status had not been effectively terminated.

[Vol. 20

SUPPLEMENTAL BENEFITS

was performed within the week of unemployment for which the sup-plemental payment was to be made. 22

In Texas, it was held that payments under the Ford plan werewages, but that they were not applicable to the period for which they werepaid, being referrable rather to the earlier period in which they wereactually earned and during which the worker was in an employmentstatus.

2 3

Two early efforts to attack the favorable rulings in a court of lawwere unsuccessful. In Connecticut, the State Association of Manufacturersfiled a tax-payer's suit to restrain the State Employment Security Agencyfrom paying unemployment insurance benefits in cases where supplementalunemployment benefits were to be paid for the same weeks. The SuperiorCourt of Hartford County dismissed the suit on the ground that theassociation lacked sufficient direct interest to maintain it.24 In Illinois, twoemployers brought suit as taxpayers to restrain the Illinois Agency frompaying benefits for weeks with respect to which supplemental unemploy-ment benefits would be paid. This suit was also dismissed on the samegrounds.

2 5

In California, however, a base period employer appealed from adetermination of the state employment security agency allowing benefitsto a claimant who was also receiving supplemental benefit payments underthe Chrysler agreement, in accordance with the ruling of the CaliforniaAttorney General. The referee ruled that the supplemental unemploymentbenefits were remuneration for personal services and, therefore, wageswithin the meaning of the definition in the state statute; and that the stateunemployment benefit payable to the claimant should therefore be re-duced by the amount of the supplemental benefit payment. This ruling

22 BES Bulletin No. U-172, 14. For a discussion of some of these rulings,see Note, 69 HARV. L. REv. 362 (1955).

23The Texas Supreme Court had held that state unemployment insurance

benefits themselves amounted to "wages or compensation." Friedman v. AmericanSurety Company of New York, 151 S.W.2d 570 (1941). But in a later case,involving severance pay, the distinction which the Attorney General makes wasrecognized by the Texas court. Western Union Telegraph v. Texas EmploymentCommission, 243 S.W.2d 217 (1951).

24 Manufacturers Association of Connecticut, Inc. v. Administrator, 20 Conn.

Super. 108, 125 A.2d 317 (1956).25Barco Mfg. Co. v. Warren Wright, 10 Ill. 2d 157, 139 N.E.2d 227

(1956), in which the court said that the payment of supplemental benefits didthe petitioners no harm, legal or actual. In the words of the court: "They donot serve to increase, one iota, the involuntary contributions paid by them, orthe unemployment compensation benefits paid under the act. . . . Since thepetitioners have not shown that they will be harmed financially by the conductcomplained of, or that the relief prayed will protect any legal interest whichthey may have, we find that the trial court acted within the bounds of its legaldiscretion in denying the petition to file the complaint." Id., 10 Ill.2d at 165,166, 139 N.E.2d at 232.

1959]

OHIO STATE LAW JOURNAL

was eventually affirmed by the Superior Court for Los Angeles County.26

The Ohio court test followed much the same pattern as the case inCalifornia. One Posey, an employee of the Republic Steel Corporation,was laid off in the summer of 1957. His application for benefits underthe Ohio Unemployment Compensation Act was allowed and he waspaid the sum of $33.00 for the week ending September 7, 1957, plus adependency allowance of $6.00. Subsequently, Posey informed the Bureauthat he had received $31.00 under the terms of the Republic Steel agree-ment. He was then ordered to repay $29.00 of the amount he had re-ceived under the Ohio law. Posey appealed to a referee, who sustainedthe decision of the Administrator, the Board of Review affirmed thereferee's decision, and the matter was then appealed to the CommonPleas Court of Mahoning County. The Board of Review decision wasreversed by the Common Pleas Court, and this decision was affirmed bythe Court of Appeals. The Supreme Court, however, saw the matter inthe same light as the Administrator, and finally reversed both lowercourts.

2 7

The majority of the Ohio Supreme Court, in a per curiam opinion,followed much the same reasoning as the Administrator had used in hisearlier ruling, even to the extent of relying upon, and quoting at lengthfrom, the Nierotko decision.28 In answer to the contention that supple-mentation was authorized by the express terms of Section 4141.36, Re-vised Code,2 9 the Court said that a study of the statute disclosed "thatclearly its purpose is to prevent an employer from evading the expenseof unemployment compensation by shifting it to his employees, and thatthe last sentence thereof (section 4141.36) clearly refers to voluntaryarrangements by and between employees and not to the type of supple-mental benefit plan involved herein."

Justices Taft and Zimmerman took vigorous exception to the rulingof the majority, suggesting that their decision resulted entirely from theinclination to find an intention which had not been expressed by the Gen-eral Assembly and which could not reasonably be implied from the wordsof the statute. These two justices thought that the payments under thesupplemental unemployment benefit plan did not represent compensationfor personal services, and did not represent payment for anything doneduring the week in issue. They also felt that the language of the last sen-tence of Section 4141.36, Revised Code, did in fact apply since the only

26Morris Furniture Mfg. Co. v. Employment Security Commission (Calif.Super. Ct. 1958), cited in 1 CCH UNEMP. INS. REP., FED. § 2300, p.2421 (1959).

27 United Steel Workers of America v. Doyle, 168 Ohio St. 324, 154 N.E.2d

623 (1958).28 Note 21, supra.29Prior to amendment, the section provided that prior provisions "do not

affect the validity of voluntary arrangements by which employees individuallyor collectively agree to make contributions for the purpose of securing benefitsin addition to those provided" by other sections of the Act.

[Vol. 20

SUPPLEMENTAL BENEFITS

difference between the arrangements referred to therein and supplementalunemployment benefits was that, instead of "collectively" agreeing "tomake contributions" directly themselves for the purpose of securing bene-fits in addition to those provided by the act, the employees had collectivelymade an agreement with their employer under which the employer is tomake contributions for their work. Thus, it is reasoned, the workers them-selves were in effect making the contributions, since they had been ob-tained through collective bargaining.

The majority opinion in the Doyle case concluded with the followingobservation:

If such a plan of supplemental unemployment benefits isto be approved in this state, that approval should not be left tomere inference but should be placed on the sound basis ofdefinite statutory or constitutional amendment.3 0

With that invitation still ringing in their ears, and with the after-effects of the recession of 1958 very much before them, the members ofboth Houses of the General Assembly in 1959 elected to pass theamendments referred to at the beginning of this article. It may be fortu-nate that circumstances3 ' combined to bring about this result, since therewas formidable opposition to the very last. It may be presumed that manyof the same groups who fought the unemployment insurance programin the beginning, and who have periodically opposed amendments to liber-alize the state laws and keep the program up-to-date, were behind theopposition to the solution through private supplementation. In any event,the issue has finally been settled in Ohio, at least for the present.

The same legislative turn of events occurred in 1959 in Indianaand California. The California amendment followed the unfavorablecourt ruling in that state, and the Indiana amendment reversed the earlierlegislative action having precisely the opposite effect.

In Indiana, despite the prior legislative prohibition, eligible unem-ployed wrokers had been able to collect private benefits under the sup-plemental plans, including retroactive payments, in preference to pay-ments under the Indiana law. Not even cumulative lump-sum SUB pay-ments had been permitted under the rulings of the Ohio Administrator.Supplemental unemployment benefit payments which otherwise wouldhave been made to eligible workers in Ohio were placed in escrow pendingthe outcome of either the pending litigation or legislative action. It isunderstood that the emergency legislation incorporated in Amended Sub-

30Judge Stewart went even further, pointing out that the General Assemblyconvened early the following month and doubtless would have the problem "in itslap." For further advocacy of this approach, see Note, 69 HARv. L. Rav. 362,372 (1955).

31The election results in the Fall of 1958 undoubtedly were the biggestsingle factor of all.

1959]

594 OHIO STATE LAW JOURNAL [Vol. 20

stitute House Bill No. 820 made it possible to pay out the amounts held inescrow for earlier periods of unemployment. 32

It remains to be seen what future course the unemployment insur-ance program will follow. It is unlikely that any major extension ofprivate supplemental unemployment benefit plans will occur in the im-mediate future. From the experience of the past, it is also optimistic toexpect a sudden voluntary trend toward more liberal amendment to theunemployment insurance acts at the state level. Progress cannot be pre-vented indefinitely, however, and if one course or the other is not adopted,more liberal federal standards, incorporated in the federal Social SecurityAct, compelling state action in the same manner as when the state lawswere first enacted, is a distinct possibility.

32 BES Bulletin No. U-172, Addendum (October, 1959).